MOT #2 - Most Influencer Marketing Is Breaking the Law (Here’s Why)

Summary

Summary of "MOT #2 - Most Influencer Marketing Is Breaking the Law (Here’s Why)"

Release Date: May 23, 2025
Podcast: Special Ops
Host: Emma Rainville
Co-Host: Ryan Potee

---

Introduction

In the second episode of "Marketing on Trial," a spin-off of the Special Ops podcast hosted by Emma Rainville and co-hosted by attorney Ryan Potee, the discussion centers on the legal pitfalls prevalent in influencer marketing. The episode delves into why most influencer marketing strategies are inadvertently violating Federal Trade Commission (FTC) regulations and offers actionable insights for brands to ensure compliance.

The Current Landscape of Influencer Marketing

Emma and Ryan kick off the conversation by highlighting a startling revelation: "Did you know most influencer marketing is not legal? Brands are paying influencers without proper disclosures, and the FTC is coming after them" (02:28). This sets the stage for an in-depth exploration of the legalities surrounding influencer collaborations.

FTC Regulations and the Importance of Compliance

Ryan underscores the significance of the FTC's trade regulation rules on consumer reviews, endorsements, and testimonials. He emphasizes that while compliance might seem daunting, "it’s really easy to comply with. It’s just people do it incorrectly all the time" (01:28). The discussion points out that many brands naively assume that simply relying on platform-specific disclosures or trusting influencers to adhere to guidelines is insufficient.

Common Non-Compliant Practices in Influencer Marketing

The hosts provide three illustrative examples showcasing non-compliant influencer activities:

1. Hotel Partnerships Without Disclosure:
   Emma narrates a scenario where a hotel offers an influencer free amenities in exchange for promotion but fails to ensure proper disclosure. Ryan clarifies, "That's going to be at the influencer. Because at that point, if you're talking to regulators, it's like we're trying to actively get this down" (08:46).

2. Donut Shop Promotions:
   An influencer gifted free donuts in exchange for a TikTok review without disclosing the sponsorship, potentially leading to trouble with the FTC.

3. High-Profile Celebrity Endorsements:
   While high-profile influencers like George Clooney or the Kardashians often comply due to their visibility, Ryan cautions that "partner is not enough" (05:52)—meaning mere partnership mentions aren’t sufficient without clear disclosures.

Best Practices for Disclosures

Proper disclosure is paramount. Ryan outlines effective methods:

• In-Build Platform Features:
  Utilizing built-in features like Instagram's "Paid Partnership" tag ensures visibility, as "it is very clear when you're using a paid partnership... you can't actually get to what they're saying without missing that" (07:58).

• Natural Integrations:
  Integrating disclosures organically within the content, such as "I partnered with [Brand]" or "I get paid to use this product," maintains authenticity while adhering to regulations.

Emma adds, "I would choose my way where the person is disclosing in a way that's letting their audience who loves them know that they love the product while still disclosing it" (07:26), emphasizing the balance between transparency and engagement.

Risks and Liabilities

The conversation shifts to the potential risks both brands and influencers face due to non-compliance:

• Brand Liability:
  If an influencer fails to disclose sponsorships properly, the brand is often held liable, even if the contract stipulates the influencer's responsibilities. Ryan reiterates, "practically it's going to be the brand every time" (08:14).

• Influencer Accountability:
  Influencers may also face penalties if they knowingly or unknowingly violate disclosure requirements.

Recommendations for Brands

To mitigate risks and ensure compliance, Ryan proposes a three-step strategy for brands:

1. Ensure Product Use:
   Verify that influencers genuinely use and endorse the product. "They have to use the product at least once" (09:13).

2. Mandate Clear Disclosures:
   Include explicit material connection disclosures in contracts, guiding influencers on how to present disclosures in their content.

3. Implement Tracking and Auditing:
   Establish systems to monitor and review influencer content regularly, ensuring adherence to disclosure guidelines.

Emma contributes by suggesting, "I would spend money on this every day... to be extremely upfront," highlighting the importance of consistent and prominent disclosures to maintain trust and compliance (06:17).

Notable Quotes

• Emma Rainville:
  "Did you know most influencer marketing is not legal? Brands are paying influencers without proper disclosures and the FTC is coming after them." (02:28)

• Ryan Potee:
  "Partner is not enough. To make a material connection disclosure, there's really two portions." (05:55)

• Emma Rainville:
  "I think that would be way higher converting than these written disclosures above the fold." (12:55)

Conclusion

Emma and Ryan conclude the episode by reiterating the critical importance of compliance in influencer marketing. They emphasize that maintaining transparency not only avoids legal repercussions but also fosters authentic relationships with audiences. The hosts remind listeners about their Influencer Compliance Checklist available for free, providing a practical tool to navigate the complexities of influencer collaborations effectively.

---

Additional Resources

• Free Downloadable Playbook:
  For actionable strategies discussed in the episode, download the Influencer Compliance Checklist here.

• Subscribe to Special Ops:
  Stay updated with the latest episodes by subscribing on Apple Podcasts, Spotify, or YouTube.

---

By addressing the legal intricacies of influencer marketing, this episode equips brands and influencers with the knowledge to navigate and thrive in the ever-evolving digital landscape responsibly.

Transcript

[Ryan Potee]

Now, granted, is that going to get you out? If an influencer goes out there and says stuff that one isn't truthful is false about the product, I see that.

[Emma Rainville]

And I send you a cease and desist takedown notice and you don't take it down, then that's on the influencer.

[Ryan Potee]

That's going to be at the influencer. Because at that point, I mean, if you're talking to regulators, it's like we're trying to actively get this down. Like, you can't just like send a.

[Emma Rainville]

Letter and be like, break your links, break your links. You're my lawyer and you've got to give me three, four steps that I need to take every time I hire an influencer. What is it?

[Ryan Potee]

Number one, make sure that.

[Emma Rainville]

Did you know most influencer marketing is not legal Brands are paying influencers without proper disclosures and the FTC is coming after them. I'm Emma Rainville, your co host with Ryan Potee of Gordon Reese, and we have created a spin off of Special Ops podcast called Marketing on Trial. We've come together to help you implement true compliance into your direct response online or E commerce brand. Our topic today is influencer marketing and how to be compliant. If you stay to the end of the show, we're going to have a checklist for you free of charge called the Influencer Compliance Checklist. So stay tuned for that. Ryan, the state of influencer marketing in 2025. I actually, when we were going through, we don't really plan these out, but we were picking topics. And so when we were picking our topics, I said, this one's probably going to be the most boring and the fastest. And you're like, this is the most important. Why?

[Ryan Potee]

No, Well, I think one of the biggest reasons is the FTC's trade regulation rule on consumer reviews, endorsements and testimonials, immediate access to civil penalties. So that just ups the ante for compliance. But it's really easy to comply with. It's just people do it incorrectly all the time and just assume that they can rely on the platforms or hope that their influencers can go out there and do exactly what the, what the brand has told them to do.

[Emma Rainville]

Also, I think most brands that engage most influencers, they're contacting each other and they have no idea that there is compliance. I believe that. Okay, can I give you a couple examples?

[Ryan Potee]

Sure.

[Emma Rainville]

We'll do three quick examples. Hotel contacts. Ryan, who has 120 followers because he loves fishing and he posts videos of him fishing and he's really monetizing any of it. But the hotel is on like this fly fishing lake. Is it lake. I don't know. This place where people like to fish and they contact you and say, hey, come stay for free, eat for free, drink for free, fish for free. You pay to fish. I don't know, fish for free. And just post about our place so that the people who watch your show will want to come fish here.

[Ryan Potee]

Yeah, that. That's going to be a testimony or endorsement the person is receiving that they need to disclose.

[Emma Rainville]

How do they disclose it?

[Ryan Potee]

A couple different ways. You could do it in the body of the endorsement or the testimonial. Be like, hey, this is Joe from Fish USA or whatever it is. You know, this is Joe. We're on the lake. And so. And so they flew me out here to show me this great place. Like you're embedding this in a more organic way, saying, hey, like they brought me here. Yeah, I'm receiving. So there's a relationship with the brand and that I'm being incentivized in some way. And so that should put the consumer on notice. Hey, by the way, you might want to be careful. I mean, I'm getting something and so this might have influenced what I'm saying.

[Emma Rainville]

Okay.

[Ryan Potee]

But hopefully it's going to reflect their experience.

[Emma Rainville]

Okay. Donut shop gets approached by influencer, who does lots of of taste tests of local food. Austin, Texas, where I live. Tons and tons and tons of local food. We have a donut shop here that I won't say the name, but we have a donut shop here that has the most incredibly strange donuts you've ever seen. But they're allegedly delicious. And so she contacts them and says, hey, I'll make a TikTok of me tasting your donut and telling everybody how amazing it is. And that if you're visiting Austin, Texas, they should come to Austin, because I have Austin Eats. Tick tock. Yeah, sure. Come on and get a free donut. I in trouble from the FTC for that.

[Ryan Potee]

Now, the second you start incentivizing them to post something about you. Yes.

[Emma Rainville]

Even though they approached me, even if they approached you, I gave them a free donut.

[Ryan Potee]

Doesn't matter.

[Emma Rainville]

Third, one, last one. I'm a large brand and I sell $500 million and I approach a large celebrity and I pay them a hundred thousand dollars to post my using my brand four times and they say, ooh, I love that. I partnered with so and so. My skin is so much clearer now. Compliant. She's partnering.

[Ryan Potee]

Yeah, I Don't think you're going to run into an issue there, because I think for two reasons. One, really well known celebrity.

[Emma Rainville]

Okay.

[Ryan Potee]

And then two, when they start, when you hire a really big celebrity, you know, insert famous person's name.

[Emma Rainville]

Sure.

[Ryan Potee]

And then they're like, look at my brand of vodka or skin cream or whatever it is most of the time. And. And there's a counterargument to that where the FTC addresses this and some guidance that, you know, a reasonable person would see this as like. Well, you know, you don't have like an a list celebrity sitting up there talking about some product that they just love out of the kindness of their heart. They're being compensated for it. Which is why when you turn on the television, right. When you see George Clooney talking about an alcohol brand or the Kardashians about something else, no reasonable person is going to think that they're doing that just because they wanted to.

[Emma Rainville]

I don't know that I agree with you. Why George Clooney? You know, he looks like an alcoholic to me. Seems like. Seems fair. Just seems fair. Maybe he's not. I don't know. Definitely looks like he pushes some back. But let's take the Kardashians. There is no aspect of the Kardashians life that isn't lived out on tv. From divorces to births to lies, to big mistakes to sisters fights, to hair dye, to lip injections, to botch surgeries to mental illness, cheating. Like, they live everything. They wake up in the morning, they get in their glam chairs. You watch them get all of their stuff. They talk about the things that they love, their salads that they like. Are they partnering with lemons? Like, you could certainly just take it and think that it's just part of their every day.

[Ryan Potee]

No. Very true. And that's why the FTC has come out and said, yes. Using a celebrity is like one of these factors.

[Emma Rainville]

But saying partner is enough.

[Ryan Potee]

Partner is not enough.

[Emma Rainville]

Okay.

[Ryan Potee]

To make a material connection. Disclosure, there's really two portions.

[Emma Rainville]

Okay.

[Ryan Potee]

To put the consumer on notice that there's a relationship between you and the brand.

[Emma Rainville]

So we're partner.

[Ryan Potee]

We're partners. But then the whether or not the person providing that endorsement or testimonial is actually being incentivized. So it's free.

[Emma Rainville]

Can you believe I get paid to use this skincare product?

[Ryan Potee]

I think you're going to be fine with that.

[Emma Rainville]

Okay. What if I just put hashtag ad?

[Ryan Potee]

Hashtag ad should be fine.

[Emma Rainville]

Okay. Because, you know, I was about to.

[Ryan Potee]

Do but it depends on where it's, where it's appearing. So if you're on Instagram is a blow the fold and so is it, you know, hashtag ad at the very end of a lengthy discussion about the product buried Amongst, you know, 80 hashtags.

[Emma Rainville]

That's what I was going to say.

[Ryan Potee]

No, it needs to be at the top. And the FTC says that needs to.

[Emma Rainville]

Be the first hashtag.

[Ryan Potee]

It needs to be the first hash, not only the first hashtag. The FTC would say that it actually needs to be above the text. So you can get into these debates with regulators over where it should be. But the FTC is going to say the material connection disclosure needs to be unavoidable. So you couldn't possibly miss this. That the consumer would read this and understand, okay, well, this person's receiving something or it's an advertisement or a promotion for some sort of brand.

[Emma Rainville]

From an operational standpoint, to not kill conversions. I would choose my way where the person is disclosing in a way that's letting their audience who loves them know that they love the product while still disclosing it. Like, can you believe I got to partner with them and I get paid to actually do this? Or I get paid to use this product? Or can you believe that I get this product for free just for posting it on here? Like I would spend, spend money on this every day. You know what I mean? As you're looking at yourself. So I would certainly do it that way from, from an operational standpoint.

[Ryan Potee]

Well, yeah, and so, so many of the platforms now have, in the built in paid partnership.

[Emma Rainville]

Yeah, yeah, things like that.

[Ryan Potee]

Now the FTC has come out and said you can't just rely on that. But even their kind of discussion about.

[Emma Rainville]

You can't rely on it because it might not show up every time.

[Ryan Potee]

It might not show up every time, or it's not prominent enough.

[Emma Rainville]

But if, if it shows up, is it enough?

[Ryan Potee]

Ryan saying, I think it is fine, especially in the meta platforms. I think it is very clear when you're using a paid partnership. I mean, it's right at the very top. I mean you can't.

[Emma Rainville]

And he just says sp sponsored a paid partnership.

[Ryan Potee]

You can't actually get to what they're saying without missing that. I mean, I guess if you're not, don't have your glasses on, but I think that's pretty low risk.

[Emma Rainville]

Okay, all right, so let's talk about risk. I'm the brand, you're the influencer. We go into partnership. The disclosures, the FTC doesn't feel like the disclosures are enough. They go after you or me, both.

[Ryan Potee]

Could be liable, but practically it's going to be the brand every time.

[Emma Rainville]

Okay. Even if, even if our contract says that you're responsible.

[Ryan Potee]

Yes. I mean the contract is great to have because you're gonna say, you know.

[Emma Rainville]

The contract will say I tried to in good faith.

[Ryan Potee]

Yes.

[Emma Rainville]

Like do what I'm supposed to do. And this influencers off the frickin rails.

[Ryan Potee]

Give them the material connection disclosure and every single post that you put on social media about our brand, this is what you must say. Now granted. Is that gonna get you out? If an influencer goes out there and says stuff that one isn't truthful is false about the product.

[Emma Rainville]

Okay, I see that and I send you a cease and desist takedown notice and you don't take it down, then that's, that's on the influencer.

[Ryan Potee]

That's going to be at the influencer. Because at that point, I mean, if you're talking to regulators, it's like we're trying to actively get this down. Like you can't just like send a letter and be like.

[Emma Rainville]

But break your links. Break your links. Break your links that they're using. If you do that. Okay, I don't want to get too hung up on that. Thank you. That's really good information. So if you, your brand and you hire me as an influencer. Actually, I'm not going to do that. You're my lawyer and you got to give me three, four steps that I need to take every time I hire an influencer. What is it?

[Ryan Potee]

Number one, make sure that the influencer actually uses the product. So there have been instances where you have these influencers that just like come to you and they're like, hey, can I just promote your brand? Can I promote your brand? Like they just want either free product or money. They don't really care how great the product is. They just want to be something.

[Emma Rainville]

Yeah, absolutely.

[Ryan Potee]

Right. So I mean, some of that goes to authenticity.

[Emma Rainville]

I didn't know they had to use your brand.

[Ryan Potee]

Oh, they, absolutely. They have to use the product at least once.

[Emma Rainville]

Right.

[Ryan Potee]

Well, like if they're saying product review. Well, product reviews are a little bit different.

[Emma Rainville]

Well then product endorsements, I understand. We got two different. So we have two buckets. We have two buckets. Product review, product endorsement. If you're gonna do a product endorsement, make sure that they're continuously using your product.

[Ryan Potee]

Yes. So if the endorsement is like, I love this guy, I love this skin cream. This is why I use it every day. Like, look, I don't have any wrinkles. Like, this is what I use on a daily basis. If that's not true, then that whole endorsement or testimonial is a lie. Yeah, exactly.

[Emma Rainville]

It's false. Not false advertising. Deceptive advertising.

[Ryan Potee]

Exactly. I mean, the first thing is make sure that they're actually going to use your product and look at what they're kind of going to be saying about your product. Number two would be if you are incentivizing anyway, they need to include a material connection disclosure, and that goes back to the contract we were just talking about. You can draft out the material connection disclosures that they need to present in every single one of their ads.

[Emma Rainville]

Whether it's, can you believe I get paid for this? Or do you believe they send this to me for free just because I share it with you? I'm so lucky.

[Ryan Potee]

Exactly. And then I. I guess the third point is you might not. At certain size, you might not be able to review every single one of these testimonials or endorsements that gets placed, but you need to have some sort of audit or tracking process in the back. On the back end of all of this. So whether it's the influencer emails, an inbox somewhere that has a link to all the ads, that at least someone at some period of some interval is going on, and, you know, either doing keyword searches or something to figure out, like, what these people are saying. I mean, there's an obligation on the business to police with the affiliates, not affiliates, what the influencers are saying on their behalf. So those are the big. The three main things that I would recommend.

[Emma Rainville]

Awesome. Before we wrap up, any final thoughts on influencer marketing and what's coming?

[Ryan Potee]

No, I mean, I think it's a great way to build brand engagement. It is the most authentic way to do it.

[Emma Rainville]

And brand reputation's important.

[Ryan Potee]

And, you know, I think we might disagree or come to, you know, we would politely disagree on whether or not some of these disclosures affect conversion, but I think at the end of the.

[Emma Rainville]

Day, we've actually avoided that in this podcast somehow. I think that the. Putting the ads. Putting hashtag ad and saying nothing. I think that will absolutely, like, I trust you to share with me what you're using as an influencer that I follow. I don't follow influencers, but I'm talking about the mindset of people who sit and watch other people's stuff constantly. We know what I watch, and it's not stuff like murder mystery stuff. But I think that when you bury it, and I know you're not burying it, if it's the very top it says hashtag ad, I think it would have very low conversion. I think you'd have a much higher conversion. Just by being extremely upfront, I am beyond blessed that this is my life and this is my job and I get paid to share this with you all. Or can you believe that they send this stuff to me for free just because of you? Thank you guys for coming in and watching and buying the products that I recommend. Because of you, I get to do this right. So I think that that would be way higher converting than these written disclosures above the fold that you're talking about. I just think that people just aren't going to connect with it in the same way they connect with, oh my goodness. Ryan went to this hotel and they gave him this free thing so that he could go. And he told me what to eat, and he told me what to drink and he told me where to fish. And he was like, make sure you thank them for sending me out here so I could share this with all of you. There's an authenticity that if I'm a follower, you know they're cult like, right?

[Ryan Potee]

Totally.

[Emma Rainville]

So if they're a follower, they're going to follow you when you lead them. When you try and like have these disclosures that don't make sense to them, I just feel like they're looking at it as like they're not even discussing it with me. They're just getting paid and they don't really feel this way. Does that make sense? I just. That's what I think. I don't know. I could be wrong. Probably not though. So as we wrap up, thank you so much, Ryan for doing this with me. For those of you that don't know, Ryan and I have created sponsors spin off of my podcast Special Ops podcast called Marketing on Trial because we've had so much fun. He's had so much fun with me. I've had a lot of fun not paying him to ask him a bunch of questions. A lot of money. But he's a really good attorney. So I'm super fortunate and beyond blessed to be doing this with you. So thank you. If you want to get notifications every time we post a new episode, go ahead and like and subscribe so that you can do so. Additionally, we have co written a influencer compliance checklist which is in our visionary vault at www.specialopspodcast.com. you can check out all the tools and courses in there. We've covered in a few things, and we'll have all the stuff about influencer compliance and what to look for in your own business. Thank you, Ryan.

[Ryan Potee]

Thanks, Emma.